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Gold and Silver – Daily Outlook for October 16th

October 16, 2013

The prices of gold and silver continue to zigzag and yesterday both precious metals slipped. Their recent fall coincided with the strengthened against leading currencies such as Japanese yen and Euro. The recent news from the U.S government shutdown is that the deal was almost struck yesterday, which may have contributed to the rally of the USD. Alas, no agreement has been made and for now the deadline for the debt ceiling breach, which will be reached tomorrow, is still on. These recent developments have already put the U.S credit rating on watch again and Fitch might downgrade the U.S’s rating. These changes are likely to keep the volatility in the financial markets high. Will gold and silver change direction again and rally? On today’s agenda: Euro Area CPI, Great Britain Claimant Count Change, and Canada Manufacturing Sales.

Here is a short overview for bullion for Wednesday, October 16th:

Gold and Silver Prices Review – October Update

On Tuesday, gold declined by 0.27% to $1,273.0; Silver also slipped by 0.76% to $21.17. During October, gold decreased by 4.05%; silver, by 2.39%. In the chart below are the normalized prices of bullion for 2013 (normalized to 100 as of September 16th). The prices of gold and silver have slightly fallen in recent weeks.

The ratio between the two precious metals rose again on Tuesday to 60.15. During October, the ratio decreased by 1.70% as silver has slightly out-performed gold.

The gold and silver futures volumes of trade have risen and reached on Tuesday 214 thousand and 65 thousand, respectively. For both metals these trade volumes are the highest since the beginning of the month. If the volume continues to pick up this week, it could suggest the odds of sudden sharp change in the prices of gold and silver as a result of high volume will rise.

On Today’s Agenda

Great Britain Claimant Count Change: As of last month, the number of unemployed in GB had declined by 32.6k; the rate of unemployment inched down to 7.7%;

Euro Area CPI: Based on the recent report, the annual CPI fell to 1.3%, which is well below ECB’s target inflation; if the inflation continues to drop, it could raise the odds of ECB cutting again its cash rate;

Canada Manufacturing Sales (August 2013): This report will refer to the manufacturing sales in Canada as of August. It may affect the USD/CAD currencies pair, which is strongly linked with commodities. In the last report regarding July 2013, manufacturing sales rose by 1.7%;

Currencies / Precious Metals– October Update

On Tuesday, the Euro/ USD currency pair changed direction and slipped by 0.28% to 1.3524. During October, the Euro/USD slightly rose by 0.27%. Moreover, other currencies such as the Canadian dollar and yen slightly depreciated yesterday against the U.S dollar by 0.28% and 0.42%, respectively. The correlations among gold, silver and Euro remained weak in the past couple of months, e.g. the correlation between the Euro/USD and gold price is 0.25 during September/ October.

Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):